PG&E Refinancing Bill Enacted

Nearly six months after Pacific Gas & Electric emerged from bankruptcy, legislation giving it explicit authority to lower the financing costs of its $2.2 billion regulatory asset, created to boost its credit rating, became law. Governor Arnold Schwarzenegger signed SB 772 by Senator Debra Bowen (D-Redondo Beach) June 8. ?By signing SB 772, the governor saved customers of PG&E approximately $1 billion and contributed to the state?s economic recovery post-energy crisis,? California Public Utilities Commission president Michael Peevey said in a statement. The amount of ratepayer savings is not known but will be less than $1 billion because of the higher costs associated with the $2.2 billion regulatory asset. Each day of delay is estimated to cost ratepayers $300,000 ( Circuit , Feb. 13, 2004). PG&E?s refinancing will not occur in the immediate future because it is still dependent on other factors, including a decision by the Internal Revenue Service whether to classify the refinancing and issues of securitized debt as taxable or nontaxable. The utility must also file a financing order with the CPUC. This will initiate a proceeding to determine whether the refinancing would save customers money, another condition needed to allow the dedicated rate component financing to go forward ( Circuit , May 28, 2004).

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PG&E Refinancing Bill Enacted

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